So many conflicting statements about what to do at expiration of bonus day

barrowman

According to Martin's explanation this time: "

. Yet once it's in an ISA, it stays tax-free year after year, so some who've maxed out every year's allowance have £100,000s protected from tax. So as the last tax year ended just over a week ago...

If you put money in an ISA last tax year, even only just before 5 April, you can now put up to another £20,000 in, as it's a new tax year."

This seems to suggest that my current ISA reaches it's term end in May I should leave the money there, start putting another amount in it up to £20000 or do I start a new ISA and put money into it. Otherwise how can I protect the interest from being taxed.I have the full £20000 in the ISA so I could transfer it to a new ISA but where does the interest go? It can't go into the new ISA because I can only put £20000 in it.

masonic

If your ISA allows additional contributions, then you can add to it. Alternatively you could open a new ISA for this tax year. Interest does not count towards the ISA subscription limit. It will normally be added to the account by the provider automatically.

EthicsGradient

barrowman said:

According to Martin's explanation this time: "

. Yet once it's in an ISA, it stays tax-free year after year, so some who've maxed out every year's allowance have £100,000s protected from tax. So as the last tax year ended just over a week ago...

If you put money in an ISA last tax year, even only just before 5 April, you can now put up to another £20,000 in, as it's a new tax year."

This seems to suggest that my current ISA reaches it's term end in May I should leave the money there, start putting another amount in it up to £20000 or do I start a new ISA and put money into it. Otherwise how can I protect the interest from being taxed.I have the full £20000 in the ISA so I could transfer it to a new ISA but where does the interest go? It can't go into the new ISA because I can only put £20000 in it.

I'm not sure what you think conflicts with the quote you give. It is correct. And I'm not sure what "bonus" you're talking about.

If your ISA is a fixed term one, then your provider will say (I'd hope they've already said) what will happen when the term ends. One thing we can be sure of is that any interest gained after May will not be taxed - unless you yourself make the decision to withdraw cash from your ISA.

Yes, you can transfer the 20k to another provider - and you can transfer the interest you've earned inside your ISA with it. And, as well as that, you can contribute up to 20k new cash into that ISA. The 20k is a limit on new cash contributed from outside ISAs. Money already inside an ISA can be transferred (note you must use the official transferal process) with no limit.

barrowman

Thanks to both of you. I wasn't being critical of Martin I was just showing that as an example as compared to one person saying that I Must move the money to another ISA or I would loose the interest and another saying that I could only transfer the £20000 to a new ISA and would have to transfer the the interest to another bank account.  The ISA is a fixed term one and ends on 22nd May so I haven't heard anything from Nationwide yet. 

surreysaver

You don't move the money. The new bank/building society moves the money. If you move the money yourself, you lose the tax-free protection. The transfer needs to be done by the ISA provider.
Any money already within an ISA from a previous tax year can be transferred. It won't count towards this year's £20k subscription limit.

jimjames

barrowman said:

Thanks to both of you. I wasn't being critical of Martin I was just showing that as an example as compared to one person saying that I Must move the money to another ISA or I would loose the interest and another saying that I could only transfer the £20000 to a new ISA and would have to transfer the the interest to another bank account.  

Who is saying you have to move the money or lose the interest? Anyone saying that isn't telling you correct information (or you may have misunderstood what they intended)

There's lots of ISA Q&As on the forum here that might be of use as the questions may have come up already https://forums.moneysavingexpert.com/categories/isas-tax-free-savings

haze23

It's possible there's some confusion depending on specific account terms but fundamentally you are allowed to contribute £20k of new money to an ISA each tax year. Any interest (cash ISA) does not count towards this contribution.

I don't think I've heard of an ISA account being converted to non-ISA at the end of a term but you'd have to check. The interest rate may plummet but I'd expect it to remain an ISA. Some accounts may unusually pay out the interest to a different account, that then wouldn't be within an ISA wrapper.

All money within an ISA wrapper from previous years (so contributions and interest) can be transferred by the bank and not count towards the current year. Whether a new account will permit transfers in (i.e. previous years' money) is a separate question. Of course, if you're happy with the rate on your existing account, and it's definitely not being converted to non-ISA, you don't need to transfer anything.

That's a bit long-winded but there are a few scenarios, so you may need to be more specific with details but hopefully this gives you more of an idea. BTW you can have multiple ISA accounts (£20k pa between them, not each).

Bigwheels1111

All ISA’S stay as an isa. Only loose the isa wrapper when moved by to owner.
When an isa gets to the end of its fixed term it will stay an isa, but probably at a lower rate.
So you either leave it and loose money or initiate a transfer.
I for eg. Have 4 separate isa’s in different banks.
Two are fixed term and two are easy access and I use them to fund my regular savers.
The two fixed term isa’s mature later in the year, So in July I will open a new isa at a fixed rate, then initiate a transfer. This is done by the bank so all funds stay in the tax free isa wrapper.
Not all isa’s allow transfers in.

https://www.gov.uk/individual-savings-accounts/transferring-your-isa#:~:text=To%20switch%20providers%2C%20contact%20the,your%20tax%2Dfree%20allowance%20again.

saajan_12

barrowman said:

Thanks to both of you. I wasn't being critical of Martin I was just showing that as an example as compared to one person saying that I Must move the money to another ISA or I would loose the interest and another saying that I could only transfer the £20000 to a new ISA and would have to transfer the the interest to another bank account.  The ISA is a fixed term one and ends on 22nd May so I haven't heard anything from Nationwide yet. 

The bit in bold is simply untrue. If you have an easy access ISA, it'll often just stay there indefinitely, including any interest. If you have a fixed term ISA, the provider may have a process eg renew it or move it to a lower interest easy access account. Either way, that's the provider moving the money not you and doesn't count to your 20k limit. 

If you WANT to move the money, then you ask the ISA provider(s) to do it for you, so it still doesn't count towards your 20k limit. 

friolento

saajan_12 said:

barrowman said:

Thanks to both of you. I wasn't being critical of Martin I was just showing that as an example as compared to one person saying that I Must move the money to another ISA or I would loose the interest and another saying that I could only transfer the £20000 to a new ISA and would have to transfer the the interest to another bank account.  The ISA is a fixed term one and ends on 22nd May so I haven't heard anything from Nationwide yet. 

The bit in bold is simply untrue. If you have an easy access ISA, it'll often just stay there indefinitely, including any interest. If you have a fixed term ISA, the provider may have a process eg renew it or move it to a lower interest easy access account. Either way, that's the provider moving the money not you and doesn't count to your 20k limit. 

If you WANT to move the money, then you ask the ISA provider(s) to do it for you, so it still doesn't count towards your 20k limit. 

Some also renew a fixed term ISA into another fixed term one. All of them will send you maturity notices, which include the options you have.

@barrowman misunderstands how ISAs work and might want to read https://www.moneysavingexpert.com/savings/best-cash-isa/#what

Nationwide are extremely unhelpful with their advice on maturity options by claiming you have only 2 options, namely

• reinvest in a new Fixed Rate Cash ISA
• withdraw all your money and close your ISA

They then go on presenting a 3rd option, which is that the ISA matures into an easy access ISA if you don't give them other instructions.

It's pretty shoddy of them to omit that you can also request an ISA transfer via a different ISA provider.

https://www.nationwide.co.uk/savings/help/fixed-rate-isa-maturity-options/

barrowman

What Friolento said about Nationwide may have been true in the past but what they say now is:
"You can, of course, choose to do something else with your savings. You can find out

more about our instant access cash ISA and your other options below.
Here are your options:
· Do nothing and keep your money in an instant access cash ISA. With this ISA,
you can take money out whenever you like, without your rate dropping. Please see
the enclosed terms and conditions, and summary box telling you everything you
need to know.
· Move your money into another cash ISA (if eligible) or savings account with us.
If you choose another cash ISA, your savings will remain tax-free. See our range of
savings accounts at nationwide.co.uk/savings or visit us in one of our branches.
· Transfer your I SA t o another provider. They'll have to arrange the transfer for you.
· Close your account. You can take your money and do whatever you want with it.
Closing the account could mean your money loses its tax-free status.
If you decide to open a new account or close your existing one, you can do this through
our internet bank (if you're registered), or online at nationwide.co.uk/savings You can
also come into branch if you'd like some help."